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Money Decisions to Make in Your Twenties

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I am sure, twenties is the best time in anyone’s life. The energy, excitement, adaptability, confidence to conquer the world and the ability to work on your passion cannot be matched. Some things that have helped me to date and I want you to keep in mind during your twenties are:Money in your twenties

Start building an emergency fund: Unexpected events like job loss, accident, losing a loved one, illness can happen to anyone at any time. Not having funds in such situations can make it even worse. So, one of the first money decisions you should make is to start an emergency fund. Save some money in a separate account (make it easier to manage) and only use it in difficult times. Don’t buy stocks with this money or make any investments that can lose money or are illiquid.

Start saving for retirement: When you have just started to work, retirement seems so distant; so many years away that saving for retirement may not be one your priority list. Don’t let that stop from saving for retirement. Make contributions to your employer sponsored retirement plans like 401K and take advantage of any matching contributions. One of the best retirement saving tools available is a Roth IRA account where you can make contributions on an after tax basis, but all qualified withdrawals are tax free. Starting early will help you take advantage of the compounding returns (which can add up quickly).

Get health insurance:  The cost of medical care is too high, and while in your twenties, if you are leading a healthy life, it may seem that you don’t need health insurance, it can be a big mistake to not take one. Go for a High deductible plan and protect yourself in case of a serious illness or condition that requires medical attention

Build your skills: We live in a dynamic environment, where skills that are in demand today may not be in demand tomorrow. Always keep learning and improving your skill set. It is your responsibility to keep yourself employable and prepare yourself to take advantage of change in trends. Focus on building both soft skills and technical skills; a combination of both is required to be successful in most fields.

Make Some Extra Cash: There are some great ways to make some extra money to start saving for the future. Even things like selling some of your clutter on Ebay or Amazon allows you to make some extra cash. Another way to make money online is by making and selling your own designs on sites like Etsy.

Don’t pile on credit card debt:  Is debt avoidable? Yes it is if you only buy things you can pay for in cash you will never have to deal with debt. There are some big ticket items that may warrant debt like a home purchase but for most other items buy only things you can afford (even a car).

Don’t be afraid to take some risks: Twenties is about exploring what you want to do, how you want to do. Sure, you will get chances to take some risks later in your life, but taking risks early on will give you more time to recover from any unfavorable outcomes.

Build relationships:  Build meaningful relationships. Building a network of handful of people who can help you in achieve your objectives and stand by you in time of crisis. Be sure you can do the same for them. It is better than collecting thousands of business cards at networking events.

Learn from mistakes of other people: It is important to learn from your own mistakes but life is too short to just learn from your own mistakes. Learn from mistakes of other people and avoid similar mistakes in your life.

Author Bio: Rohit is the founder of TheMoneyMail.com. After working in the financial industry for five years he started The Money Mail where he write about various topics related retirement planning, earning more and managing you career.

Kim’s Comments: I wish I had been smarter in my 20’s. Hopefully all of you young pups will take Rohit’s advice, especially about avoiding credit card debt. It’s a killer.

Image by flickr


About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. I would add learn to live on the cheap. Not college student cheap. But don’t think that just because you got your first job, that you should throw down money on a deluxe entertainment center, a luxury car, and a huge house.

    Build yourself a nice, but modest, lifestyle so that as you get raises and promotions you can rapidly increase your savings rate.

    • @myfijourney: Thats a good point and I have to agree, you get tempted to spend when you first start a real job and start making more than your regular expenses. But if once can stay focused at the larger picture, they can help keep costs low.

  2. I think the single most important thing on this list is to not be afraid to take risks. Especially if you read personal finance blogs, very few seem to embrace risk, even though your 20s is the time to take risks, in my opinion.

    • And I am not just saying that, I left a very cozy corporate job to start my own venture. Twenties is one of the best time to start something new, worst case you will gain experience you will gain experience that will help you make better decisions in future.

  3. These are all great ideas. Unfortunately, I did everything wrong in my twenties and have had to fix everything in the past 5 years. Better late than never?!?!?!?

  4. My favorite is “Start saving for retirement.” I remember when I was in my 20s, I went to a financial seminar that taught the basics of investing (mutual funds, IRAs, etc.). At one point, I looked around the room and noticed that everyone else was in their 40s or 50s. They had missed the boat. Unfortunately, this behavior seems to be the norm.

    I’m in my 30s now and hardly any of the people that I know who are my age are doing the right thing. A couple of them even said that ‘they’re too young to start saving for retirement.’

    Scary. I think we need better financial education.

  5. These are all great tips! Budget in your 20s people!

  6. Perfect tips, unfortunately I waited too long until I got my finances straight, now well into my thrities and finally got things a bit more organised, but man I wish I had done it sooner.

  7. These are all great tips! I made many of the common mistakes in my 20’s, but have learned from them. One of main things that many miss is the importance of time…especially in terms of saving and investing. Time does wonders, even if you start out small.

    • That is a good point John, one of the main benefits of starting early is that you give yourself time to recover from any market crashes and if you can continue to invest in downturns, you will come out stronger.

  8. Good advice! I would also add to never stop updating your resume and keeping your eye out for new opportunities, because too many people get complacent at their jobs, then if something happens like getting laid off they are not prepared (raises hand).

    • @Budget and the Beach: Never a bad idea to keep your resume updated and build relationships in your industry. They help out in ways you have never imagined.

      I was once asked to submit my resume in an hour for an internal program in my company.

  9. Mandy @ MoneyMasterMom

    I really like the advice to be willing to take some risks. I don’t understand why some people in their 20’s insist on investing in fixed income investments. They generally grow at the same rate of inflation meaning you’re only breaking even. Considering you have lots of time before you retire I think 20 somethings should look towards ETF or equity investing.

  10. I started most of these already and I only have a few more months in my twenties. I wish I would have done them earlier, but better late than never. Thanks for the tips Rohit!

  11. Good tips, especially not accumulating credit card debt and to learn from the mistakes of others. Part of being in your 20’s, is the thought that you know everything, when in reality you really don’t 😉 As you get older, you realize that.

  12. I’ve always wondered about the “take risks” part. I understand the rationale, do it while you are young and there is less depending on you. But if a risk goes too sour, it can continue to haunt you well into your 30’s when you are now trying to settle down.

    • Ed, I can agree with the sentiment. Lets say once comes out of college at 21-23 age. You have a good amount of years to experiment with couple of careers or a couple of your own ventures. Of course your options are limited if you are dependent on a paycheck to make ends meet but if you are fortunate enough to have some backing from grandparent or parents, you can take some risks early one and still have time to return to a normal career.

  13. A great list and one that applies no matter your age! All the tips are spot-on. The one I think too many people ignore is having an emergency fund. I get that money is tight, so it may seem smarter to use that money to eliminate debt or pay bills, etc. But we can’t plan for everything and my emergency fund has saved me countless times.

  14. I did a ton of bad spending in my twenties. I bought 2 snowmobiles, one for me and one for my wife. I bought a timeshare, which I never used and sold for pennies on the dollar. The truth is I think we make most of are bad spending choices when we are in are tweinties because in most cases we are flush with case and nothing to spend it on and saving it for retirement sounds to boring compared to getting a snowmobile.

    If only I could have gone back to that point in time and stopped just a hand full of those bad decisions I would be so much further off today. On the other hand I learn a lot and it’s probably the reason I’m so careful with my money today.

  15. Good list! I would add to make some career plans as well as fianncial plans.

  16. Rohit, you hit so many of the financial points that are often lost on younger adults. Many still feel invincible or that they have decades to save. Great post.

  17. Awesome post! I really knew nothing in my 20s. Looking back, I needed to spend more time building skills and building relationships. Talent (skills) and people connections are the two things I think move you forward quicker than anything.

    • Agree Brian, I was also behind on this in my early twenties and dint not appreciate the value relationships could add to career but now I am more aware.

  18. Great advice Rohit. I like the one about taking risks, it is so much easier to bounce back when you are young and have a whole life in front of you. There are already things I wouldn’t do in my 30s that I would have done 10 years earlier, the kind of investments for example.

  19. I’m happy to say that in my twenties I owned 2 homes by then and was excellent with my money only because I learned young to spend less than I earned. One thing I didn’t have to do is buy health insurance and I never used credit cards. I wish I had invested more in my retirement but you can’t have it all I guess> I’ll be working on that this year now that the mortgage will be paid. Great post shared on FB to see what my fans have to share! Cheers Kim

  20. I would definitely suggest starting a dividend income portfolio. The power of dividend compounding through my 20’s and into my early 30’s spins off $25k/yr in dividend income for me. This amount grows better than inflation given companies increase their dividends each year at rates of 5% or more.

  21. I’d also say build your pension. The sooner you do it the more money you’ll have when you retire!!

  22. I wish that I had started saving for retirement earlier. We contributed to my wife’s 401k as soon as we learned, but a ROTH IRA took longer to start.

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